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Bull of the Day: Garmin (GRMN)

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Well-known for its GPS devices, Garmin (GRMN - Free Report) is a company that designs and builds navigation and communication devices that help users map routes in a car, on foot, in a boat, and in a plane.

Blowout Q3 Earnings

Garmin’s Q3 results continued to show healthy growth across its businesses, and is on track to record its third consecutive year of accelerating sales growth.

Revenue of $934 million jumped 15% year-over-year; its aviation, fitness, outdoor, and marine segments collectively increased 24% compared to the prior year thanks to increasing popularity of the respective products. Adjusted EPS surged 27% to $1.27 per share, easily beating the Zacks Consensus Estimate of 94 cents.

Gross margin expanded to 60.7%, while operating margin hit 28% in the third quarter.

Garmin also unveiled its Autoland system for general aviation; the system will help land small aircraft, without pilot assistance, in the event of an emergency.

Overall, CEO Cliff Pemble attributed the company’s successful quarter to “our lineup of great products in every market segment.”

GRMN is on the Rise


Shares of GRMN are up over 53% since January compared to the S&P 500’s return of about 28%. Earnings estimates have been rising too, and Garmin is a Zacks Rank #1 (Strong Buy) pick right now.

For the current fiscal year, four analysts have revised their bottom line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 26 cents from $3.90 to $4.16; earnings could see about 12.75% growth compared to the prior year period. 2020 looks pretty strong too, with earnings and revenue expected to continue positive year-over-year growth.

GRMN currently trades around 22X its forward full-year earnings estimates, slightly above the broader Computer and Technology Market (21.3X).

Garmin is one of the few tech stocks that has embraced diversification, as well as successfully moved away from risky business segments like its auto GPS devices. The company upped its 2019 outlook back in October, and looks to meet those targets thanks to positive expectations for this holiday season. If you’re an investor searching for a broader tech stock to add to your portfolio, make sure to keep GRMN on your shortlist.

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